Last month, I had the pleasure of attending the sixth annual True Value Partnering Institute (TVPi) conference in Miami. TVPi is a consortium of pricing and legal project management professionals who meet regularly to discuss and evaluate the state of the legal industry from the viewpoint of legal operations within law firms. The annual conference brings together clients and law firms to listen, discuss, and collaborate on legal operations topics.
At the conference, there were many interesting sessions on leadership, industry trends, and innovation in legal practice through the use of technology. The presentation I found most eye-opening was delivered by Aaron Kotok, who at the time was at AdvanceLaw and is now the Director of Industry Strategy and Innovation, at McDermott Will & Emery. Aaron’s presentation was an update of key findings from AdvanceLaw’s GC Thought Leaders Experiment, an exercise centered on testing industry assumptions and understanding how to improve the legal market and relationships between law firms and clients. Below are my key takeaways from the presentation, and how they relate to what we are accomplishing as a Client Value and Innovation team at Ballard Spahr.
Hourly rates matter to GCs, but less than one might think.
The top three attributes that correlate with a GC’s likelihood to recommend a law firm are: 1) a solutions focus, 2) quality of work, and 3) legal expertise. Hourly rate ranked seventh out of the seven attributes GCs could choose from. Emphasizing rates blinds us to what actually matters most to clients: identifying a sound strategy for handling legal work efficiently and achieving positive outcomes as defined by the client.
This doesn’t mean that hourly rates and pricing aren’t important. A law firm’s pricing proposal should be part of an overarching, outcome-focused strategy based on the needs of the client. At Ballard, we focus heavily on helping our Partners come up with the appropriate budget and diverse staffing model for each matter to ensure that we offer the highest quality legal services and fair, accurate fee proposals. Our suite of Ballard360 technology tools allows us to operate efficiently and manage to our budgets. Our lawyers can focus on what is really important to their clients. More often than not, it’s high-quality, outcome-focused legal work.
Am Law Rankings do not have a direct correlation with a firm’s “Solutions Focus” score.
One of the more interesting findings showed Am Law rankings plotted against each firm’s “Solutions Focus” scores. While it might come as a surprise to some, there is no direct correlation between a firm’s Am Law ranking and its “Solutions Focus” ranking. This appears to reinforce the sentiment that in-house counsel are keenly focused on making results-based decisions when choosing outside counsel, which do not necessarily correlate with the position of a firm in the Am Law 100.
Geography has little correlation with the “Likelihood to Recommend”
Being in the same city and having the ability to sit down with your attorney used to be sacrosanct. The advent of cell phones and sophisticated videoconference technology has made it possible to speak to and see your attorney with the click of a button. One major AdvanceLaw finding was that the city population of a lawyer (between 1M and 10M) had little to do with “Likelihood to Recommend.” The results of the survey indicate that firms should be attentive to providing the best possible team to their clients, regardless of the location of the client or the attorneys.
At Ballard, it is the mission of the Pricing and Legal Project Management teams to staff and price matters with the fee earners who provide the best value to our clients. One ancillary benefit to clients is that the best attorneys for the job might be in lower cost markets.
Be thoughtful with your fee proposals
At the presentation, we discussed the client view of what constitutes a sufficient and insufficient response to a fixed fee budget request for a single-plaintiff litigation in an RFP. The sample RFP did not supply information on the scope of the matter and the first firm provided a response that pretty much boiled down to, “Yes, we can do fixed fees.” The second firm went above and beyond by analyzing each phase of the matter, assuming the scope and the tasks involved, and providing a proposed fixed fee per phase and a total. The second firm obviously got the work.
Comprehensive responses like the one provided by the second firm require an in-depth understanding of the typical cost of a matter, gleaned by reviewing historical data. At Ballard, we continuously track and monitor the performance of our fixed fee budgets. We do this through the use of our Ballard360 technology, which allows us to track our progress in real time and refine our assumptions for future work. We monitor matters in real time with the hope of providing clients more accurate value-based fee arrangements through the use of historical data.
Qualitative feedback leads to significantly higher performance scores
Firms that ask for qualitative feedback from clients see significantly higher scores across the board versus firms that did not. At Ballard, we have a Client Interview Program through which we regularly seek feedback from our clients. We use the results of client interviews along with our Ballard360 technology tools to encourage a feedback loop between the firm and clients.
In sum, the law firm size, ranking, and geographic location are not as important as having a solutions focus and the expertise the client is looking for. As legal technology advances, the practice of law will become even more innovative. Firms that recognize this opportunity will continue to grow their market share in a competitive legal market and win additional business from existing and new clients.